Insights 
VT 
Broader Timeframe Perspective
Looking at a broader timeframe, the neutral stance was adopted last Friday, 17 October, when the spot rate was 0.5725. The currency was expected to fluctuate between 0.5685 and 0.5770 due to eased downward pressure. This perspective remains consistent with recent observations, as noted by FXStreet’s Insights Team. The team provides market insights sourced from both commercial notes and analysts.
Given the neutral outlook, we see the NZD/USD pair likely trading sideways, making strategies that profit from low volatility and time decay attractive. The price action gives no fresh clues for a breakout, so we anticipate a period of range-bound movement. This suggests traders should consider selling options premium rather than taking a directional stance.
The Reserve Bank of New Zealand’s decision to hold its Official Cash Rate at 4.25% earlier this month supports this view. With recent data from September showing New Zealand’s quarterly inflation easing to a 2.8% annual rate, there is little pressure for further hikes that would push the kiwi higher. This economic stability reinforces the floor under the currency without providing a catalyst for a rally.
Outlook and Strategy
On the US side, the Federal Reserve is also on hold, balancing core inflation that remains sticky near 3.1% against last month’s softer-than-expected retail sales numbers. This mix of data is preventing a decisive, strong move in the US dollar, effectively capping the NZD/USD pair. The market is waiting for a clearer signal from either economy before committing to a trend.
For the next few weeks, we anticipate the pair will remain within the broader 0.5685 to 0.5770 channel. Therefore, selling an options strangle with strike prices just outside this expected range, such as a 0.5800 call and a 0.5650 put, could be a viable approach. This strategy would capitalize on the currency pair remaining stable as we head into November.
This market environment is reminiscent of the trading conditions we saw back in late 2023, when both central banks paused their tightening cycles to assess economic data. During that period, the NZD/USD pair experienced several weeks of low volatility and range-bound trading. We expect a similar pattern to unfold now, rewarding traders who are positioned for sideways price action.
